18 September 2017

The UK is currently falling behind its G7 competitors by the widest gap in recorded history when it comes to economic productivity, and a new study suggests this lag is being fuelled by employers seeing low-paid workers as disposal labour rather than investing in training to upskill their staff.

Left wing organisations, including the Institute of Employment Rights, have been saying for years that a lack of investment in low-skilled and low-paid workers is a drag on productivity that damages our economy, but the latest report to come to the same conclusion is one by the Centre for Social Justice (CSJ) – a think tank chaired by former Tory Work and Pensions Secretary Iain Duncan Smith.

Andy Cook, the Chief Executive of the CSJ, said: "The bottom 20% cannot reach their full potential if they are not equipped with the skills they need to climb the jobs ladder. At the same time, the economy as a whole suffers if these workers cannot contribute as their natural talents would allow if circumstances were different."

While the CSJ focused in their recommendations on creating apprenticeships, and implied there had been a harmful affect on the economy of low-skilled immigration, they failed to point to the weakened protections in employment law that have left workers open to exploitation.

Work by leading lawyers and academics conducted on behalf of the Institute of Employment Rights has evidenced that the decline in labour standards and pay rates began 35 years ago under the Thatcher government, which introduced new anti-trade union legislation and diluted workers' rights.

This neoliberalist approach to the workplace has been extended by subsequent governments, leaving the UK's 31 million workers with far less protection for their wages and conditions of work than in the decades before.

In our Manifesto for Labour Law, we recommend the reinstatement of sectoral collective bargaining, in which trade unions and employers' association negotiate minimum pay and conditions across entire industries, coupled with stronger trade union rights to allow workers to build upon these minimums in their individual enterprises.

By pulling together in this way, workers have greater leverage in negotiations with their employers, and industrial relations become stronger, allowing workers to have a voice in the workplace on such thing as their wages, opportunities at work, training, and on the creation of apprenticeships.

This not only puts upward pressure on pay and conditions, it also discourages employers from competing against each other through a race to the bottom on labour standards and wages; thus incentivising them to compete on more sustainable growth factors such as investing in their staff, training their workforce, and innovating their products and services. This, in turn, strengthens the economy and boosts productivity.

Read more about this and our other proposals in our Manifesto for Labour Law